Can the nickel price hit fresh peaks?

Base metals continue to steam ahead, with nickel reaching fresh record peaks above $51,000 per tonne. And its run looks to be far from over.

Base metals continue to steam ahead, with copper marking a fresh 11-month high and lead and nickel reaching new record peaks above $2,100 and $51,000 per tonne respectively. These three metals have been the best-performing commodities this year, notes Bloomberg, with respective gains of 30%, 41% and 67%.

Nickel's run looks far from over. Stocks of the metal, a key ingredient in stainless steel, have reached 'critically low' levels, says Chris Flood in the FT, and demand is rocketing according to Greg Peel on Egoli.com.au. Chinese nickel consumption grew by 25% last year, underpinning global consumption growth of 7.4%, says financial services group Cannacord Adams; this year Chinese consumption is set to expand by 17.4%. Overall demand will again outstrip supply, and inventories are set to fall to 2.6 weeks consumption. Delays to major mining ventures will keep consumption above production in 2008 . And unless China suffers a spectacular economic collapse, it is likely to be consuming almost twice as much nickel by 2010, says Cannacord.

Investment bank Calyon has raised its average nickel price forecast for 2007 to $44,000 a tonne and expects prices to average $50,000 in 2008. There is a nickel ETF listed in London (NICK).

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up